What is IVA?
IVA stands for the individual voluntary arrangement. It is an agreement between the client and creditors through which the client is able to pay his debts at an affordable rate. There is a fixed period of time over which you have to pay the IVA. The remaining balance will be waived off after that fixed time period which is usually up to 6 years. For the management of IVA, a qualified and licensed insolvency practitioner is appointed who presents a proposal that explains your financial situation to the creditors and makes the case for why you need an IVA.
How does it work?
The licensed insolvency practitioner will detail the realistic amount that can be paid from your side. Now, after signing the proposal, there will be a meeting of the practitioner with creditors who will vote on acceptation, rejection or modification of proposal. If 75% of the creditors vote in favor of the proposal, then the IVA will move ahead. Now, if the client is successful in getting his IVA application approved, then he will be protected against any legal action from creditors or any other sort of collection activity.
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Who needs to apply for IVA?
Anybody who is afraid he will not be able to make up the due payments as per the due date, then IVA is suitable for him. In order to see whether a person is eligible for an IVA or not, you have to go through any debt advisory service provider online and see if you can qualify according to the criterion. You can hover the website and see if you can talk to the customer service agent or fill up the inquiry form to see if you qualify for IVA.
Merits of IVA
- IVA is really affordable and customized as per the financial situation and debt amount of the individual
- Starting from the date of approval, the charges and all the interest will be frozen.
- After completing the said time period of IVA, all the remaining amount of debt will be waived off.
- The insolvency practitioner will keep in contact with you through the entire process and client will receive continuous support from the practitioner.
- The creditors who have included their claims in the IVA will not be allowed to chase you for payment and neither can they pursue any sort of legal action against the client.
- If the client cannot pay the installments on time, however, some lump sum amount of money can be arranged anyhow, then this might be presented as a way of full and final IVA.
Demerits of IVA
- Decide the terms of IVA carefully, because if you fail to follow them, your assets might be at risk.
- If the client fails to maintain the agreement and IVA fails, then the creditors can take action against the client and might have him bankrupted.
- The credit file will have the mention of IVA, and it will remain there for 6